My name is Emily. I am a 28-year-old teacher with a net salary of about Sh36,000. My expenses are as follows: Rent Sh10,000, food and groceries Sh10,000, mom Sh3,000, tithe Sh3,600, salon Sh4,000 (Sh2,000 biweekly), power, water and GoTv Sh2,500, airtime and internet Sh1,000, cooking gas Sh1,500. My budget is so strained that I sometimes struggle to afford decent clothes and shoes. I am hardly saving as I am left with so little. Being a teacher under the TSC, I am contemplating taking a loan of about Sh500,000 to start a clothing boutique as a side hustle. Is this a good move? How can I budget my money more wisely? I work so hard every day and have little to show for it. I recently got a pay raise in the teachers’ deal but that has been a drop in the ocean and couldn’t offset even the water bill.
Gertrude Njeri is an accountant, personal finance and investment consultant. She works as a community manager for an investment company
Looking at your budget, most of your income is locked into fixed commitments namely rent, food, tithe, helping your mum, salon, and utilities.
After those are paid, you’re left with almost nothing, which explains why you’re struggling to buy clothes or save. The first step is to create some breathing room.
Reducing salon visits to once a month and handling simple styles yourself in between could save you around Sh2,000.
Meal planning and bulk buying could trim your food expenses by another Sh2,000 to Sh3,000. You might also be surprised at how much small, untracked daily spending (snacks, impulse buys, MPesa charges) can add up. Even Sh100 a day is Sh3,000 a month.
Tracking every expense for 30 days will reveal areas where you can cut without affecting your quality of life.
You also have an expense of Sh3,600 for tithe. Whereas tithing is a matter of personal belief, it is not cast in stone.
It is unwise to continue being financially constrained when you have this allocation being dispensed to other people at every paycheck, not to mention the possibility of weekly church contributions and donations that you have not accounted for. Suspend this allocation forthwith.
These minor budgetary cuts will give you a disposable income of at least Sh7,600 for a total of Sh8,000 when you factor in the balance of around Sh400 that you are left with after your current budgetary allocations.
Now, about that Sh500,000 loan for a boutique. I know the dream is to create an additional income stream, and a boutique sounds exciting. But here’s the reality.
A loan of that size could mean repayments of Sh16,000 or more every month for the next three years, regardless of whether the business makes a profit.
The boutique industry is also highly competitive, and without a unique selling point, you could be spending heavily on rent, stock, and marketing before you can establish a steady flow of customers.
If sales are slow, you’ll still repay the loan, and with TSC, the deductions are automatic. You wouldn’t even get the chance to hold the money before it is gone.
A safer way is for you to start small, but with a larger vision. Since you are a teacher, explore the possibility of taking weekend classes.
These can end up paying as much as Sh2,000 per weekend duty, which will add to your disposable kitty. In the medium term, this hustle could grow to offering independent private lessons to various groups seeking various certifications, for example, private candidates seeking to sit their national exams.
You may also consider creating teaching materials that you can sell online, such as digital teaching content that includes notes, worksheets for parents and students online, and manuals guiding parents and students on how to maximise their chances of success in the curriculum-based education (CBE).
Before expanding the boutique, build an emergency fund for unexpected costs like delayed salary. Start with a goal of one month’s expenses, then work your way up to two or three months.
Even putting aside Sh3,000 a month from the disposable income of Sh8,000 you salvage will make a cumulative difference.
These funds should go into a money market fund where they will be compounded daily and still be accessible within minutes. Do your due diligence to ensure you save these emergency funds in an MMF platform that has easy, legitimate and legal access, possibly via mobile money.
Put the remaining Sh5,000 into a Sacco account to start building your financial base for potential future financing, and for future projects.
These funds should be in an account that will earn your dividends north of 10 per cent. As your situation improves, you can gradually improve your wardrobe as you are in a field that requires decent attire and in which clothing can have a direct correlation with self-esteem.
The goal here isn’t to shrink your life, Emily. It is to create enough breathing space in your finances so you can grow, whether that’s into a fully fledged side hustle, a more comfortable wardrobe, or a solid savings habit.
If you start small, stay consistent, and avoid locking yourself into a big loan too soon, you’ll be in a much stronger position three years from now. Do not rush into taking loans just because of the ease of access.
If you have any money problems, send us an email at [email protected] and leave your number for contact. Money questions will be answered in this column .
